Design outsourcing set to hit Indian shores

GEETA NAIR
Posted online: Tuesday, December 28, 2004 at 0502 hours IST
Updated: Tuesday, December 28, 2004 at 1235 hours IST

PUNE, December 28: India’s manufacturing exports of $40 billion (2003) may not be close to China’s figure of $300 billion but that does not rule out India’s potential to be the next big manufacturing exports story.

“The second and much bigger wave of manufacturing offshoring is yet to come. The first wave amounted to around $460 billion and consisted mostly of labour-intensive items. The second wave, just beginning, could reach $1.6 trillion annually and will consist of skill-intensive manufacturing. This will work to India’s advantage,” said Ved Narayan, vice-president, Asia-Pacific operations, SolidWorks Corporation.

Mr Narayan, who handles the Asia-Pacific region for SolidWorks which develops and markets software for mechanical design, analysis and product data management, said that India also had the potential to become a design-outsourcing hub and can replicate its software services success in this space as well.

US companies, which have development centres in India, are increasingly outsourcing industrial and engineering tasks to India. “The last few years have definitely seen increased activity in the Indian CAD/CAM/CAE space with MNC product vendors realising the importance of India as a cost-effective destination for outsourcing CAD/CAM/CAE work,” said Mr Narayan.

India has the expertise in 3D modeling and plant engineering in sectors like aerospace, automotive and industrial machinery. In the automotive sector, according to industry sources, 15 global car makers, including GM, Ford, Daimler Chrysler, Mercedes-Benz, Audi, Isuzu and Nissan, have set up outsourcing offices in the country, with a combined budget of approximately $1.5 billion. Component makers Delphi, Visteon and Caterpillar too have found India their best bet.

Mr Narayan pointed out that the cost of automotive design in Europe ranges as high as $800 per hour, and even higher in the US while costs are as low as $60 per hour in India for equivalent quality. So, global auto makers are increasingly turning to India for sourcing a wide range of needs that even include designing models meant only for global markets,” added Mr Narayan.

The Indian 3D CAD/CAM//CAE/PLM market is estimated to be worth $30 million, with the CAD market alone estimated at $12 million. “Until now, 2D players dominated the market. But recently there has been a definitive shift towards 3D. This shift is due to the long-term cost effectiveness, ease-of-use and powerful modeling capabilities of 3D software. There is tremendous reduction in product time-to-market cycles using 3D software. We have also seen companies reducing their production cycles by almost 50%,” Mr Narayan said.

SolidWorks entered the Indian market three years back. Apart from a representative office SolidWorks also has a R&D development team with over 45 people in Pune as well as customer support center. The company has experienced an exponential growth with 250 commercial customers and 50 educational institutions.